Support for the Self Employed

The government has now announced the following
measures concerning Self Employed workers and partnerships.

Self-employed workers will be able to apply for
taxable grants worth up to 80% of their average monthly profits to combat loss
of income due to the coronavirus pandemic. The grants will be capped at £2,500
per month and not everyone will be able to claim.

The
grant will initially be paid out (but not until June) as a taxable lump sum
covering the months of March, April and May. This will then be extended for a
longer period if necessary, after that.The scheme will apply to around 95% of
those who earn the majority of their income from being self-employed.

A significant number
will still not be able to apply for any support, including those with average
annual trading profits of £50,000 or more, and those who have only
started self-employment since April 2019 and therefore haven’t filed a tax
return yet.

This does not apply to clients who have PAYE (employment income)
and are in receipt of rental income or who are directors in a Limited company.

Who will be eligible for the scheme?

In order to apply to the new Self-employment Income Support
Scheme, the following must apply:

· You must earn more than half of your total income
from self-employment. This must have been the case for either your
2018/19 tax return or the average of your 2016/17, 2017/18 and 2018/19 tax
returns (or both).

· Your average annual trading profit must be less than
£50,000. Again, this must have been the case either for
your 2018/19 tax return, or the average of your 2016/17, 2017/18 and
2018/19 tax returns (or both).

· You
must have filed a tax return for 2018/19. This means you must
have been self-employed prior to 6 April 2019. If you were due to file a 2018-9
tax return but missed the deadline this year, you will have until 26 April to submit your tax
return.

If you became self-employed since April 2018, your
2018/19 tax return will be used instead. Unfortunately if you only became self-employed
on your 2018/19 tax return, this will be counted as your total profit for the
year – the Government will not pro-rata it based on your monthly profits.

How do I apply to the scheme?

Once the scheme is
operational, those who are eligible for the scheme will be contacted by HMRC
directly. At this point you will be asked to fill in an online form and the
grant will then be paid directly into your bank account.

If you believe you are eligible and don’t hear anything when
HMRC does start contacting people, it will be worth contacting HMRC at that
stage

I’m not eligible for a grant – what other help is
available?

Not all
self-employed people can access this help – for example, if you earn more than
£50,000 per year or less than half of your income is from self-employment. If
you don’t meet the eligibility requirements unfortunately you won’t be able to
claim, but there are other schemes available

· You can apply for a
business interruption loan. The temporary Coronavirus Business Interruption Loan
Scheme is open to self-employed people and offers access to loans, overdrafts,
invoice finance and asset finance of up to £5 million for up to six
years.
The Government could also give you a Business Interruption Payment to cover the
first 12 months of interest and fees on the loan.

This scheme is now open for applications and is offered by all
major banks.

·
You can defer your income tax payments. If
you have income tax payments due in July 2020 under the self-assessment system,
you can defer them until January 2021.

· You
can access universal credit in full. The Government has removed the minimum income floor
to universal credit and will also be boosting the standard allowance from 6
April – meaning a single person aged over 25 could get a standard monthly
allowance of £409.89.

I am eligible but can’t wait until June – what can I do?

If you are eligible
for help from this scheme, it is still unlikely you will receive payment until
June at the earliest.

To mitigate any
hardship you can try applying for a business interruption loan if eligible, or
universal credit (for universal credit, the grant will be treated as earnings –
so you will need to check eligibility for the grant once this comes through).
You may experience difficulties in accessing the telephone service but keep
trying, the online service is currently not available

Additional information

If
I apply for the grant, do I have to stop working?

You
may still continue working and earning if you’re able to once you have applied

If you are a new
business and have not started trading before the 5th of April 2019 –
If you have not filed a return for self-employed earnings in
2018/19, you will not be eligible for the grant

If your business
made a loss in this first year of trading you will not be eligible for the
grant The grant you will get would be based on your average
monthly profits, if you made a loss, you will not be eligible for anything. You
may still be eligible for a business
interruption loan or universal credits.

The scheme may be
extended beyond the next three months depending on the continuation of the
crisis. The government would be reviewing periodically

There has been no confirmation of repayment to the
government of the grant in the event of higher earnings in the tax year 2020-21